Microsoft stumble sends Wall St sliding
The NZX50 is on track for its weakest month since April last year.
Stocks on Wall Street were rattled by Microsoft’s earnings as the tech giant’s slower than expected cloud growth put it on course for its worst day since the covid pandemic hit, in contrast to Meta Platforms’ rally as the Facebook owner’s use of artificial intelligence to get people clicking on ads found favour with investors.
Apple’s earnings after the bell will be the next gauge on the AI sector, with a flurry of results this week providing all manner of mixed cues as Germany’s SAP cast a pall over its bourse, South Korea’s Samsung Electronics showed demand remains robust, while ChatGPT developer OpenAI is poised to raise another major funding round.
Meanwhile, US President Donald Trump’s latest sabre-rattling over Iran pushed Brent crude oil prices above US$70 a barrel and gold prices remain elevated amid the heightened uncertainty in the global environment.
And locally, New Zealand’s S&P/NZX 50 index is on track to post its worst month since April, with Australian futures pointing to a muted day downunder when trading begins, while local retailers will be plugged into the latest ANZ consumer confidence survey when it lands.
All about the AI
Shares of Microsoft tumbled 12% in late trading, putting the tech giant on track to mark its worst day since early 2020 when the covid pandemic hit after investors were disappointed by the firm’s slower growth from its cloud business than expected.
That cast a pall over the tech-heavy Nasdaq Composite, which was down 1.7% in late trading, with the S&P 500 falling 1% and the Dow Jones Industrial Average slipping 0.4%.
“There was a risk-off tone across global equity markets led by US technology stocks,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Microsoft reported higher-than-expected spending on AI infrastructure, reigniting investor concerns about the vast capital expenditure by large US technology companies.”
Meta Platforms fared better, jumping 9.9% with investors impressed by its use of AI to bolster its digital ad revenue.
Tech was a major theme through the day with Samsung Electronics’ chip unit beating expectations during the Asia trading day, while the outlook for Germany’s SAP disappointed investors.
European stock markets were mixed as Germany’s DAX 30 dropped 2.1%, while the UK’s FTSE 100 advanced 0.5% and France’s CAC 40 increased 0.1%.
The money-go-round
Meanwhile, OpenAI is said to be seeking as much as US$100 billion in its latest funding round, with Nvidia, Microsoft and Amazon among those reportedly discussing investing US$60 billion.
Apple is poised to report after trading closes, with the iPhone maker the next marker for the tech sector.
That downbeat tone is set to continue into the antipodes, with Australian futures pointing at a 0.3% decline for the S&P/ASX 200 index when trading opens across the Tasman. New Zealand’s NZX50 has dropped 1.5% so far this month with one trading session to go, while the ASX200 is up 2.5%.
New Zealand’s tech firms such as Gentrack, Vista Group International and Eroad were weaker yesterday.
The global environment remains uncertain, with gold prices remaining elevated after hitting a new record and futures up 1.4% at US$5,371 an ounce at 7am in Auckland, while Brent crude oil climbed above US$70 a barrel after US President Donald Trump continued to pressure Iran into reaching a deal on its nuclear programme. Brent crude futures rose 3.4% to US$69.69 a barrel at 7am.
Still, there might be an easing of the volatility on some fronts as Trump said the White House is moving towards reaching a deal with Senate Democrats to avoid another federal government shutdown and that he managed to convince Russian President Vladimir Putin to hold back bombings in Ukraine as it prepares for an extreme cold snap.
And the US president said he plans to announce his nominee to replace Federal Reserve chair Jerome Powell next week.
Local data today include the ANZ consumer confidence survey, which follows this week’s earnings upgrade from Michael Hill International, showing a recovery in New Zealand’s sales at the jewellery chain.
The kiwi dollar fell to 60.60 US cents at 7am in Auckland from 60.81 cents.
Reporting by Paul McBeth. Image from Ed Hardie on Unsplash.
This story has been updated to include the NZ dollar rate.
